June 1, 2017

Relative vision

Things look different, depending on how you look at them and what facts are pertinent, and are excluded or included…

“Cash for clunkers” scrapping old cars can be seen in one way if you promote it as getting dangerous and dirty old cars off the road, though how that works here in the UK with an annual MOT Test that will itself exclude dangerous and dirty cars from the roads is another question, and the whole thing gets seen in an entirely different light if you put it alongside a government propping up a failing motor industry and a financial industry financing all of this with dodgy loans and personal leases that are then rehypothecated and sold as securities to pension and investment companies.

So, this is a cropped screenshot from today’s online version of the Daily Fail, and I am quite sure that it is not just me that immediately saw the connection, especially as the low low low interest rates are only fixed for two fucking years.

People, especially people who have played the property market for the last 30 years and become exceedingly wealthy on paper, get extremely angry with me when I talk about exposure.

Your exposure is limited if you are 100% mortgage free and own 100% of the equity and both own and POSSESS the deeds to the property and the freehold land it sits on, you still have some chinks in the armour, but things could be a lot worse.

Now that we have dealt with those 6 people (sic) let’s talk about everyone else, and everyone else falls into one of two categories, and the split is defined by law, which of course is itself subject to change, and that is the point at which your own equity share of the whole is sufficient that whoever owns the rest, they cannot force foreclosure and sale to settle their share of the equity… there is lots of “you have to own a third” or “you have to own / have paid off half” stuff going on out there, and of course there is a difference between a clause existing in theory, and that same clause existing in black and white in your own mortgage agreement… I don’t have a mortgage of my own to look at, and nobody that I talk to can actually whip out a legally binding document to examine, and everyone that I know who has “re-mortgaged” because of some “advantageous” offer from the loan company kinda assumed that most of the small print will be the same as the previous agreement, but again, nobody who I talk to can actually whip out a legally binding document to examine.

Then there is the third class, which is those who are blissfully unaware that a debt can be sold or transferred, and the person who owes the money has no say in that, and that the new owner has no legal force of any kind compelling them to adhere to the same terms as the previous lender, and in any event, it is the one who is owed the money that makes the rules.

Oh, yes, but those are edge case scenarios, they all say, well, no, that’s mainstream actually, *most* mortgages are immediately rehypothecated / sold off to another sister (but legally separate) company as securities that are sold to pension and investment firms.

So the truth is that basically none of those people who call themselves “homeowners” actually legally own a house, or anything else, other than a debt obligation, which can itself be re-sold.

Again, for foreign readers, the UK is not the US, in the UK you *cannot* just give the lender the keys and walk away from the “asset” and the associated debt at the same time, you can *only* discharge the debt by paying it off, and the “paying it off” is the bastard, because it can be sold and re sold, and there is nothing at all forcing subsequent owners of your debt to stick to the same terms as you signed up for in the beginning.

“Yes Mr Smith, we are quite aware of the fact that you had a repayment £175,000 mortgage with Max Friends Life Inc for a 20 year term at a 2.2% APR, however that mortgage is now owned by Max Life Friends Inc, and we are increasing the interest rate from 2.2 APR to 9.6% APR, you are of course free to either pay off your remaining mortgage in full in cash now (with a suitable penalty) or find another company who will take over the mortgage from us, we will be quite happy to sell your debt to Friends Life Max Inc for a £10,000 arrangement fee, and they will charge you 10.8% APR.

Welcome to the reality of being a debtor.

In UK Law, as it stands today, which can be changed, you can be legally evicted from your “home”, but you’ll still owe the money.

In Uk Law, as it stands today, you can’t actually be imprisoned for not paying this debt (provided nothing illegal went on, such as you getting a liar loan, or an ordinary mortgage for a property you subsequently let out, etc etc) and the lender can take you to Court and get CCJ’s against you, Bankruptcy is the nuclear option that nobody wants, you’re free of the debt but you can never borrow anything again ever from anyone, it’s like being made a non citizen in today’s society where even a mobile phone contract involves a credit check.

CCJ’s are the legal equivalent or being tarred and feathered, you still owe the money and you have a bad name legally, and depending on the CCJ in question… currently in the UK..

are all types of debts that can have special CCJ’s with powers to deduct from your earnings at source, so when you go and live in a tent they can still take your money at source.

Nor are people aware that “my mortgage is always paid up to date by standing order, I have never been in arrears, it’s just the bloody 10k credit card debt I’m having problems with…” isn’t any kind of safety net, the credit card company can force your mortgaged house to be repo’d and put on sale to settle the debt.

Or the mortgage company can use the credit card debt as an excuse to increase your mortgage rate, you *did* read all that small print about you not owing anyone else any significant sums of money while you hold the mortgage didn’t you?? didn’t you? Oh well…

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In short, you can argue that house price inflation is the least of the changes in the debt market in the past 30 years, the biggest changes by far are the changes to all the Terms and Conditions applied to these debts, and the attitude of the general populace to the changes that have taken place.

So, when you see two articles as above that just happen to be placed next to each other, when you are like me and see the obvious connections of even “cheaper” (when talking about debt, cheap means easy to get in to, it’s got fuck all to do with how easy it is to service long term or get out of) debt being used to prop up a shaky housing bubble for as long as possible, you see it as a sign, that finally the bubble may be about to implode and a whole load of chickens may be coming home to roost.

My own brother could be living mortgage free in a 500 year old house with 5 acres of land, instead he is living mortgaged up in a thoroughly modernised 500 year old house with 5 acres of land worth well in excess of a million.

The problem is, you can’t make an egg out of an omelette, and he can’t go back to debt free in a 500 year old house on 5 acres, through the miracle of debt, (and a few shoddy expensive modernisation builders) *that* property ceased to exist when he started in on the renovations.

He isn’t worried, *they* have assets equal or greater to the mortgage, “assets” like pensions and so on, you know, things that can be wiped out in toto overnight because the pension / investment fund that holds the million plus in their favour, “invested” it in rehypothecated loans, and now they are junk.. so what will happen then? Will his half million mortgage on what was a million plus property vanish? will it fuck.

The only things that will vanish are the market value of the house and the golden pension pot that made the mortgage seem like no risk at all…

Now, I can rail and rave about what a twat my brother is and how much I hate him and am jealous of him and how stupid he is, none of those things are true, blood is thicker than water, when my own FRA hit the fan he turned up with one of his sons to help me pack and move, and he has never once asked me “did you do it”, and it is entirely my own privilege to not forgive him for stealing my toy duck when I was four, even if he didn’t actually steal it.

He’s actually well educated and worked most of his life in the city as it were, and he is not unaware of any of the above, it’s more of a fuck it, if it does it does, in the meantime, why not ride the tiger?

I was actually thinking yesterday that a big part of his problem is that *I* was the financially irresponsible youth, spending everything I could get my hands on on motorcycles and booze and drugs and parties, while he was the sensible one who just went to work and started getting mortgages and never got in trouble with the po-po.

He never had a debt he couldn’t service, he never learned… I did, and will never forget or forgive, once bitten, forever shy…

He’s also basically spent his entire life as an employee earning a monthly salary plus bonuses and junkets, I think I’ve spent maybe 5 years of my life in that particular comfort zone, and comfort zone it is, finances are *easy* when you get a fixed sum every month and as soon as you get it the clock starts counting down to the next one…. finances are *harder* when in addition to next months rent and bill and day to day expenses you plan for stuff like regular major vehicle maintenance and so on, and some of those items are “as soon as I get the spare money” rather than things that just get booked in the diary.

I’ve travelled a lot, and well, and stayed in those places for weeks rather than the usual 12 days with a day either side flying there and back, but I’ve never been in the situation where I could sit down now and book next year’s holiday, I have no fucking idea if I’ll have the money in July 2018 to go somewhere and have a good time and spending money.. that shit scares me as much as signing up for a personal vehicle lease.

So it matters, a lot, what you look at, how you look at it, and what is sat next to it when you do, so much so that it utterly transforms the thing that initially you thought you were going to look at.

There was *one* interesting comment in the daily fail, a 44 year old man still saving up to buy his first home, because he missed the tail end of the old house price scheme before the bubble started.

It’s interesting because most of the hype in the MSM is about the plight of “first time buyers” and the difficulties they face on the “housing ladder”.. yes, a ladder, something you climb to greater heights, double plus good stuff, and the inference is that these are all “younger” people, you know, the people for whom this is the first time the fair has come to town, not those who have seen it all before and know all the stalls are rigged…

As someone who us currently seeking to rent / lease commercial property, I’m again in contact with those who work in real estate, and I have to tell you, they are fucking scared and fucking desperate, there is pretty much an even split between those who simply are not interested in talking to me because I won’t even consider signing a lease at £25k p.a. that I can’t pay, and those that would love to rent me something, but don’t have anything on the books that meets my requirements…

So it’s that a lot of the places that in the broadest terms might be suitable (size and location etc) and are vacant, when I go to look at them I see a notice like this on the door, the old tenant has been evicted for not keeping up with the lease… so now those landlords and agents are a bit leery too… there is a lot of distrust between all parties, and that’s one of the most effective restrictions on business and the economy going.

Of course I relate all this to my home owning friends, who dismiss everything I have to say because I am some sort of freaky archaic loser who does not own an 800 square foot “house” worth a quarter of a million, so I hit them with my “head assplodez” comment… this is fucking commercial property dude, you know, fucking BUSINESS property, you know, those places that have EMPLOYEES, people who go home to mortgaged houses that they “own” that might want to climb the property ladder up to something as awe inspiring as your very own rabbit hutch with enough land out front to swing a very small cat, maybe…

Maybe we can then revisit all those parties that you never invited me to where all the guests congratulated each other on how their houses had “earned” more than they had so far this year.

There was another post in the daily fail about an english couple around my age finally found living in a 20 foot container in Mallorca, seems they have been wanted since 2009, when, facing financial difficulties, they “rented” their under age kids to a paedo.

Imagine “market forces” coming to that town, where the paedo says listen folks, the guys in #7 have prettier kids, and the guys in #22 have twins, and the guys in #56 have a couple of toddlers I can put on lay away (sic) so it’s not that I’m not interested in renting little Johnny for the weekend, but three tins of beans and a roll of toilet paper is just too fuckin’ much man…

… because let’s face it, what else do you have to trade for “income” when your McHouse is finally seen as the liability it is and not the fucking Disney princess asset you have all been seeing it as these past 20?

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1 Comment

Better to have money in the bank than a liar loan mortgage, yea, but thats not really favorable either. After going to demonitization India, you realize you dont even really own the money in your bank.

Government can decide on a whim the money is now illegal, put up capital controls, and theres little the small fries can do about it.

Best thing Im hoping for is to invest in my own skillsets. Cant own much physical assets as a foreigner in Asia, except your own knowledge. I try to learn a bit about different countries from foot on the ground experience, and hope the airports stay open when/if its time to fly out. Some day I may need to return to those places if things get rough back home.

I have a wallet with different currencies for “souvenirs”, which might be handy someday.

My life and fuck all else is worth more than a comfortable prepper compound in a city of starving roving gangs and draconian police.